The more I err, the less I pay: effect of firm recall experience, firm type and recall severity on remedy to consumers
behavioral theory, product recall, recall remedy, recall experience, recall severity
Purpose- This study investigates the effect of firm characteristics and product-harm crisis characteristics on remedies offered to consumers by firms in the event of a product recall crisis. Design/methodology/approach- Published data on 868 product recalls in the U.S toy industry from 1988 to 2011 has been used to investigate the effects of firm experience in product recalls, type of firm (company versus intermediary, i.e. distributor/retailer) and product recall severity in predicting remedies offered to consumers in the event of a product recall. Findings- The findings show that firm recall experience, firm type (company vs. intermediary), and recall severity are negatively associated with recall remedies offered. Specifically, firms offer lower remedies if they have higher recall experience, if they are more upstream companies in the supply chain (farther from consumers), and the recall is more severe. Research limitations/implications- This study focuses on the toy industry and does not consider product complexity, firm reputation, and the role of external regulatory agencies in the prediction of remedies offered by firms. Future research may extend this study to other industries (such as automobiles and food) and factor the influence of product complexity, reputation, and the role of stakeholder pressures in remedial decision making by firms. Practical implication- Offering a high remedy to consumers of a recalled product may be a responsible decision by a firm, but it may also attract stakeholder wrath. The study has implications in managing multiple goals in product recall crisis management. Originality/value- Studies focused on issues of interest to consumers during a recall crisis, such as swift recalls and appropriate remedies, are limited. This study contributes to the understanding of the antecedents of recall remedies.
Muralidharan, E., Bapuji, H., & Hora, M. (2019). The More I Err, the Less I Pay: Effect of Firm Recall Experience and Recall Severity on Remedy to Consumers. European Journal of Marketing, 53(5): 916-943. https://doi.org/10.1108/EJM-12-2017-0964
Attribution-NonCommercial (CC BY-NC)